By Dan Darrow
December 13, 2022
Today's Trade Ideas
Symbol: TAN
Style: Swing
Strategy: Call Spread
Contracts:
Long Jan20 $82 call
Short Jan20 $90 call
Action Area: $2.10 - $2.55
Comments: TAN is a bullish trade idea. Different Solar stocks have led well at different times recently, but one consistent throughout the past two months has been overall strong action across the sector. TAN traded back through the 100day sma shortly after the November CPI release, and it has spent the last month building a new base above it. As one of the strongest non-defensive sectors, Solar looks to be in good shape for a turn higher once the overall market finds its footing, and TAN has an open path to the high-80s once it clears recent resistance around 83. The Jan20 call spread will be targeting an initial move to 84+ to begin locking in money, and the swing trade will have a tight stop below 78.75 (under the 100day sma) or a 30-40% net debit loss, whichever happens first.
Symbol: GSK
Style: Swing
Strategy: Call Spread
Contracts: Jan20 $36 call
Action Area: $1.20 - $1.65
Comments: We are going to revisit GSK for a bullish trade. The long-held GSK swing was closed into the huge rip into the high-30s last week, and now that the stock has rolled back down and established higher support, we can step back in for another trade. GSK’s pull-in found buyers above previous resistance at 35.50-36 and the key 8day ema, maintaining the recent uptrend that started in October. With momentum still on the upside, GSK should see another move to the high-30s to retest the December high (39.74), and the Jan20 call will be targeting an initial move to 38.50+ to begin locking in money. The swing trade will have a tight stop below 34.75 or a 30-40% net debit loss, whichever happens first.
On The Radar
DIA (and QQQ/SPY) had a huge gap open this morning following the cooler-than-expected CPI, but the ~$7.5 move came short of the initial target of $10+ for the Dec30 strangle. Similar to those other two indices, DIA rolled over sharply during the morning, trading slightly red by the early afternoon, and the big reversal means a near-term breakout/breakdown becomes less clear. The CPI reading was the first of the two big catalysts this week, so we will see how DIA reacts to the FOMC meeting tomorrow and make a decision on the shorter-term Dec30 strangle either by the close tomorrow or early Thursday.
GME had a big breakdown today. While the stock popped early along with the overall market, it quickly turned red during the morning, and it cleared key recent support at 22 by noon. The afternoon was spent grinding lower, leading to a weak finish down near 21 and its worst level since May. The Dec16 strangle is running low on time, but following the weak action today, it makes sense to stick with the bear portion of the trade, at least into tomorrow morning. If GME can follow through lower, a break under 20 is possible, so we will be paying close attention to the stock (and the options) early tomorrow.
Open Positions
Trader Author Portfolio Holdings
**As of 4pm ET December 13, 2022
